Mavenir held its annual analyst event this week and highlighted some important information highlighting its progress in transitioning to a maturing ecosystem player in the telecom equipment industry.  The company highlighted its recent Koch Brothers $500M investment; existing investors include Intel/Nvidia and Siris Capital, who remain majority equity holders.  The company highlighted that it grew revenues and bookings in the mid 20’s percent year-over-year in its Fiscal 2020, an impressive figure.  Two main themes came from the show.  First, the company’s RAN portfolio is picking up steam.  Second, the company’s portfolio now spans very wide, from telecom core to RAN.
 
The RAN portfolio has made significant progress.  The company claims over 20 deployments in 14 countries.  And, Mavenir has demonstrated the capability to deploy on AWS, IBM Cloud, Microsoft Azure, Oracle Cloud, Google Cloud, and VMWare.  The company spent a great deal of time reviewing definitions of various Open RAN terminology, to address confusion, spanning from vRAN, O-RAN, C-RAN, Cloud-RAN, and Open vRAN.  We’ve seen many public statements from Mavenir, its competitors, operators and pundits, alike, espousing the various benefits of some or all of these systems.  We think the point Mavenir was making at its conference is that Open vRAN is the most open, interoperable system.  When operators enable open systems, of course, it allows Mavenir and other vendors to bid on deals for networks that have existing equipment from traditional vendors like Ericsson, Nokia, Huawei, and ZTE.  We see Mavenir’s efforts to work with various infrastructure companies and systems like AWS and VMWare as a means of gaining a foothold with operators who are trialing or in the early stages of deploying these various infrastructure systems.  Speaking of partners, the company claims it has relationships with nearly 15 Remote Radio Unit (RRU) players.  The company says it can deliver Massive MIMO capabilities to customers, which means that its RAN systems can satisfy what would be considered mainstream 5G use-cases; this represents very significant progress over last year’s RAN capabilities. 
 
Mavenir’s portfolio is extensive.  The company made separate presentations about the following topics: RAN, OSS, Radio, Packet Core, Mobile Core, BSS/Digital Enablement, Security, Private Networks, and Enterprise over three days.  With over 5,000 employees spanning the globe, exposure to the most relevant parts of the mobile infrastructure industry, Mavenir is a serious contender for deals.  The company also highlighted that its telecom core technology uses modern programming techniques that enable it to operate on cloud infrastructure; among these are fully containerized micro-services design.  The company shared that most microservices file sizes are under 25 Mbytes, evidence that the systems are designed as microservices (and can load fast). 
 
The fact that in April 2021, well-known Koch Bros made a $500M “strategic minority” equity investment in the company is an important validation of Mavenir’s place in the telecommunications industry.  We see the investment as a reinforcement of the company’s balance sheet and an opening to new customers. 

In a briefing with Rakuten Mobile today, we learned two neat things:  It is experimenting with 3GPP on satellite, and it hopes to announced a full-stack Rakuten Communications Platform (RCP) customer as early as next quarter.  The company also shared some plans that it has for improving coverage to 96% by the end of the summer '21, and that it believes it has a 50% total cost of ownership advantage for its 5G infrastructure versus a traditional network operator.

So, what's so important about "3GPP on satellite?"  If satellites are able to communicate with all cell phones and other cellular devices, this would mean that coverage could be enabled where we might need to have placed macro base stations.  If we don't need macro base stations everywhere as satellites provide that coverage in sparse areas, or maybe even along highway routes, then a future cellular operator might be able to build its network with far fewer macro towers and rely more on a "barbell" approach, with small cells providing high throughput in busy areas and satellites providing coverage between busy areas.  This would reduce demand for 5G base stations.  Rakuten expects that its satellite partner, AST, may offer satellite coverage for Japan at the end of 2023 or the beginning of 2024 - that is a ways off.  But, this means that in 3 or so years, the need for base stations may be considerably reduced.

Also, Rakuten spokesperson, Tareq Amin, said he thinks it is possible that Rakuten may announce its first RCP customer as early as next quarter.  We published about RCP in November 2020, around when the team first started making RCP known to the public.  This means that a division of a mobile operator, Rakuten Mobile, may be selling its know-how, technology and services to another telecom operator, presumably outside of Japan.  This is a big deal in that most operators buy from vendors and systems integrators, not from others who are in the same business as them.  It is also a big deal because cloud companies like Amazon, Microsoft and Google all want to sell their cloud services to operators, too.  And, if RCP gets there first, and sells its full stack (radio, core, billing, orchestration, OSS) it would represent a first-ever full stack services deal.  

Google, the largest US Hyperscaler by revenue, reported Search and Social results that declined Y/Y for the first time while IaaS revenue grew nearly $1B Y/Y.  We were a little surprised at Facebook’s robust growth compared to Google’s. Google’s results were in line with our overall expectations for Search and Social decline in 2020 as consumers and advertisers resetting to the new normal.  We expect more targeted ads throughout 2020 as consumers live and work from home, and many students live and study from home during the fall semester.

Google has made big bets and investments in IaaS, and we continue to see AI as an area where they will attack AWS and Azure.  It is unclear if IaaS is compatible with the culture withing Google, which could put an upper limit on the verticals and companies Google can sell to.  During 1H20, Google was surpassed by Amazon in our supply chain interviews as the company with the most influence on the technological direction of industry-wide future products. 

We see a passing of the guard as AWS CAPEX is now much higher than Google’s, and the supply chain sees Amazon as more significant revenue potential.  We expect this change to reverberate throughout the supply chain, primarily based on how each Cloud provider uses custom or semi-custom semiconductors in their data center infrastructure.  This is something we are happy to talk about as we prepare our 2Q20 results and our fall readouts.
-- Alan Weckel, Founding Analyst, 650 Group

​We attended the CBRS Alliance event in Washington DC today, and by our rough estimate, about 350-400 people were in attendance representing groups such as regulators, legislators, lawyers, technology vendors, property owners, service providers, investors, media and analysts.  We were impressed with the widespread interest in the new shared spectrum technology and services running in the 3.5 GHz band that is now called “OnGo.”  We have researched CBRS for many years and found several acronyms and CBRS-specific terminology to be blossoming.  We found several themes at the CBRS Alliance event and a follow-on event at Federated Wireless, a SAS service provider, of special note: a) the OnGo experience will serve as a mold for regulators, operators and other interested parties not just in the US, but also the rest of the world, b) Tier 1 operators and WISPs appear focused on Fixed Wireless Access (FWA) deployments in CBRS spectrum, at least initially, c) many presenters focused on the “OnGo backhaul to gateways” use-case, at least as an initial opportunity, d) interested parties have a concern that PAL licenses may become very expensive when the auctions occur, and e) there were a very large number of devices supporting OnGo at this event.

Acronym soup.  The CBRS Alliance did its best to explain the various acronyms and how the various players work together.  It would take at least six pages to cover just the top-level details.  The idea here is that the 150 MHz of spectrum in the 3.5 GHz range was previously used exclusively by the US Department of Defense and is now going to be shared using a three-tier process, where the military (the incumbent) will have use of it when it needs, then private license holders will get next dibs (PAL), followed by general users (GAA).  Starting today, GAA users will begin use of the spectrum in the Initial Commercial Deployment (ICD) that was announced today, starting at 9 AM Eastern.  A group of service providers called Spectrum Access System (SAS) providers have been authorized to install radios on the US coastline that sense when the military is using the spectrum and send channel-use information to equipment that is operating in the CBRS spectrum.  These SAS providers will, therefore, coordinate the frequencies between incumbent, PAL, and GAA users.
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Our view on why OnGo and “Shared spectrum” matters.  We expect that by sharing spectrum amongst various parties, more traffic can move across a smaller range of frequency than by using the more common method of auctioning off frequency bands to be used exclusively by one entity.  We estimate that shared frequency will carry ten-times more traffic than frequency bands licensed for the exclusive use of single entities.  Thus, it is for the greater good that this OnGo / CBRS experience go the distance and allow a public demonstration of whether multi-tiered shared spectrum can succeed or not.  Already, we have the experience of shared spectrum in the 2.4 GHz and 5 GHz bands used by WiFi – there is no doubt this has been successful; in fact, most public estimates show about 80% of smartphone traffic is carried by WiFi rather than cellular systems, all of which as of yesterday was carried on licensed spectrum.  At the CBRS Alliance event, guest speaker, US FCC Commissioner Michael P. O’Reilly said that based on the success of OnGo, he expects similar models could be applied to additional spectrum (and he implied this might the sequential order of launch): C-band (3.7-4.2 GHz), 3.45-3.55 GHz, 3.1-3.45 GHz and 7 GHz (which we understand is meant to be the same thing as what is being discussed at 6 GHz by the WiFi community).

FWA opportunity is front and center.  Charter and AT&T focused their comments on their plans to deploy fixed broadband systems.  AT&T shared some impressive statistics about the performance of recent trials using Massive MIMO cell sites using distributed RAN over CBRS spectrum, which is connected to indoor baseband over fiber optics to the radio sites and then connects wirelessly to customer premises equipment mounted at the roofline: it said it achieved 140x12 Mbps at slightly over one mile over line of sight using 20 Mhz channels. Charter discussed it had deployed its first commercial FWA in Davidson City, NC to rural locations.  It also discussed how it uses dual SIM systems to allow customer coverage to Verizon’s cellular network. Charter also discussed private LTE, neutral host, and Industrial IoT use cases.  The Wireless Internet Service Provider’s Association (WISPA) President spoke about its members’ enthusiasm for OnGo and explained that 100’s of WISPs used the 3.65 GHz spectrum and expects more will use the 3.5 GHz / CBRS spectrum.  Currently, WISPA says WISPS in the US have 6 million customers.

OnGo as a backhaul.  We detected a theme that seems durable: CBRS spectrum can be used by enterprises with far-flung operations to save costs by reducing the installation of wired / optical cables and associated infrastructure.  There was an impressive list of vendors who had equipment at the show, a number of which were gateway devices that made connections between CBRS and other well-known protocols such as Ethernet and WiFi, to name a couple.  While OnGo/CBRS support is not as widespread on devices today, IoT devices supporting other wired and wireless systems certainly are, the list of which includes WiFi, Zigbee, Bluetooth, Ethernet and more.  We were taken by how compelling some presenters made a case for using CBRS simply assuming a reduction in new cabling to enable new systems such as kiosks, surveillance, digital signage, farming, and so on.  Many of these examples would increase the deployment of existing protocols like WiFi, Zigbee, Bluetooth, and Ethernet, instead of reducing their demand.  The idea that OnGo/CBRS competes with existing systems may be incorrect.

PAL auctions.  Commissioner O’Reilly said PAL auctions are scheduled for June 25, 2020.  In our formal and informal interviews, we understand there is a growing concern that CBRS spectrum auctions could be aggressively pursued not only by existing Tier 1 mobile operators but also by other players, not least of which could include MSOs and maybe even “Big Tech” companies.  Since the 3.5 GHz spectrum is where many countries besides the US have begun deploying 5G services, making equipment in these frequency bands commonplace, there is ample reason to want to use this spectrum in the US.  Bidders may raise the price high enough that enterprises will choose not to compete, and won’t view the CBRS spectrum as attractive as they had hoped.  In this case, PAL would look quite a bit more like a typical licensed spectrum, similar to other auctions.

OnGo devices abound.  At the show, the following vendors had devices on show (see pictures):  Sercomm, MultiTech, Sierra WIreless, Zyxel, Encore, Cradlepoint, AMIT Wireless, Commscope / Ruckus, Accelleran, Bai Cells, Cambium, Samsung, Google, LG Electronics, Sequans, Telit, JMA Wireless, Motorola Solutions, Cisco, BEC Technologies, Ericsson, ip access, BLINQ, Comba Telecom, and Westell.

Today, Amazon announced that it will acquire eero, a consumer mesh WiFi equipment company that as of 3Q18 had 13% revenue share.  In 3Q18, the  consumer mesh WiFi market measured just over $150M, which was up just over 34% Y/Y.  The number one player by revenue was NETGEAR in 3Q18, followed very closely by Google, who had retained the number one spot for the 5 quarters before 3Q18.  Now, with Amazon's acquisition of eero, just three players will have well over 3/4th of the consumer mesh WiFi market.  What's interesting here is that two Internet titans, Google and Amazon, are attempting to disrupt the consumer networking market that up till 2015 was dominated by hardware players such as NETGEAR, Linksys, TP-Link, D-Link  (consumer WiFi vendors) and adjacent players such as Technicolor, Arris, Huawei, ZTE and Nokia (Broadband Customer Premises Equipment vendors).

So, what does it mean that now both Amazon and Google are battling for primacy in the home networking market? 
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It is complementary to their interactive speaker business.  Both Amazon and Google have introduced various hardware products for the home, but most successful have been both of their interactive speaker products, which for Amazon has been the Echo and Dot and for Google Home.  These speakers are generally in an "always-on" mode, which allow them to listen to all sounds nearby, and which also means they are generally always connected to the WiFi devices in the home.  By always being connected, these speakers consume much of the available WiFi bandwidth in the home, deteriorating the available spectrum for other devices.  One obvious solution, which is being made available by wireless chip giant, Qualcomm, is to integrate WiFi chips with speaker chips.  That's the direction that both Amazon and Google may pursue - to integrate Home with Google WiFi and Echo with eero.  This will mean that multiple WiFi mesh devices will also represent multiple interactive speakers in the home, all while combating the over-use of WiFi spectrum in the home.
These Internet giants can, and probably will, attempt to overwhelm the market with low prices, subsidized by primary businesses.  We already see that Google's price for a 3-pack is 37% lower than eero's comparable system.  Our working theory is that Google has been selling close to no margin and that eero has been experiencing a 30's percent margin.  This is probably not good news for the following companies who either do have gross margins above 30% or we assume do, like NETGEAR, TP-Link, D-Link, and others mentioned above.

We attended the Wi-Fi NOW conference in Redwood City, CA this week and attended some interesting presentations.  We are writing about our observations and notes from the Google, Quantenna, Mist Systems and Mojo Networks presentations.  

Google Station presentation.  "GOOGLE STATION: PUBLIC WI-FI TO CONNECT THE NEXT BILLION INTERNET USERS."  Monica Garde and Erika Wool made an interesting presentation.  The jist of the presentation, from our viewpoint, is that Google is partnering with service providers and enabling these service providers to monetize the Wi-Fi network through a revenue sharing system that is based primarily upon advertising.  The company shared some statistics, which we have in the accompanying slide.

Quantenna presentation.  James Chen, VP Product Line Management presented "GREAT INNOVATIONS PART ONE: MASSIVE MIMO & DUAL-BAND 802.11AX".  Chen made the the case that 8x8 WiFi (that Quantenna calls Massive MIMO) outperforms 4x4 systems.  For instance, in its tests, at 85 RSSI and through a wall, performance was 1.6x greater using 8x8 compared to 4x4.  The company also made the case that Massive MIMO has greater throughput compared to non Massive MIMO, as well; the company has demonstrated >1 Gbps throughput in a typical home.  The company showed that Massive MIMO alleviates the "Sticky Client" using a 1x1 Samsung Galaxy Tab Active2 device.  The company did not talk about 802.11ax, unfortunately, other than to say that 8x8 is relevant for 802.11ax, as well.

Mojo Networks presentation.  Mojo CEO Rick Wilmer made the point that simply enabling Cloud-managed Wi-Fi has been done already, implying this is cloud 1.0, and that this message is boring.  The company explained that its cloud architecture is cloud 2.0 because it takes advantage of the capabilities in the cloud and enables - Cognitive Wi-Fi.  Cognitive Wi-Fi, as far as Mojo is concerned, has to do with big data (store key client parameters and run ML algorithms) and smart edge APs.  The company didn't go into deep science of ML/AI, but explained the ML workflow: 1-data collection, 2-training the classifier model, 3-trained model in action, 4-result.  

Mojo explained that it has lots of data to perform Machine Learning on.  It has 1/2M APs deployed.  The company shared that using 1 week of data of a subset across only 4 verticals (enterprise, education, mfg, retail & hospitality): 237K clients, 31M associations, 400+ applications.  Separately, the company said it has obtains 50M associations per week (in a press release).  A significant amount of the data that is delivered to the cloud has been pre-processed in the Mojo APs; the APs cache 2 days of data.  The point of these statistics, according to Mojo, is that it has more data than other Wi-Fi vendors to train its Machine Learning system on.  

According to Mojo, using inference engine, automatically fixes everything possible.  Wilmer says that this makes interacting with the User Interface less necessary because it takes care of problems automatically.  Was Mojo serious or joking when it said, "the UI may disappear as we know it."  Time will tell.

The company shared some other information that was interesting:

• 130K APs deployed at a single customers - a very large customer.  Very scalable.
• Many Mojo customers are decomissioning their EThernet infrastructure (including cables) in lieu of using Wi-Fi from Mojo. 
• Mojo deploys 'a lot' of 3 radio APs.  With third radio, a listening radio, it watches RF environment and does wireless intrusion scanning.  Every 5 seconds, it feeds critical information to the ML environment.  So, if users physically move, the AI system can make adjustments to the system so there are fewer performance issues.  The third radio can also be used as a client, to simulate performance.  This client capability can run the specific application that will used in an environment and simulate whether the Wi-Fi will perform adequately before an event (like a test at a university, for instance).
• Open Standards.  Believe all APs from all vendors should interoperate like light bulbs.  That would accelerate the Wi-Fi market.  Wilmer highlighted that the OCP event, earlier this year, Mojo 'lit up' the entire trade show floor with non Mojo APs using the Mojo system.
• Mojo will announce AP providers soon that are not Mojo APs that you can plug.  No margin stack from an OEM, purchased directly from an Asian ODM.  

Mist Systems.  Bob Friday, of Mist made a presentation on May 17, 2018.  In addition to the content from his presentation, I interviewed other at Mist personnel at the show.  The company claims it is focusing and having success in selling to large enterprises.  We learned that Mist uses Broadcom WiFi chips and has a custom-designed Bluetooth antennae array (shown at the show).  The company highlights its location services as a unique capability, and it draws upon its Bluetooth capabilities to deliver location.  However, the company's main message is its AI capabilities; in some ways, it has become the poster-child for AI amongst startups in the networking industry.  Mist's presentation at the show reiterated the same point - that it is an AI company.  

Stepping back, Mist has been shipping commercially for a year now.  In our observation and research, the company's efforts to take share from competitors has landed it on the map - over the past two quarters, its larger competitors have taken notice of Mist and see it competing at large enterprise accounts.  

During the Q&A part of the presentation by Bob Friday, Mist CTO and founder was asked something that we found very interesting; the question was what kinds of algorithms does Mist use in its system, and do they all need to learn?  The answer was to the effect that many different types of algorithms are used, linear optimization, decision tree analytics, neural networks, etc.  Friday made the case that there are just certain things you just know about how a WiFi network will and should work, so why go an have a machine learn about it when you already know it.  This begs the question - how necessary is AI in the first place, especially if the vendor and its IT workers or VARs have gobs of experience and can design and implement a Wi-Fi network right in the first place.  Looking at the problem differently, what this means is that some vendors may have had different backgrounds than competitors and can design Wi-Fi systems that know how to work under a variety of working conditions.  Friday was also asked another question - given that Mist is focusing so much on AI, does this mean that far fewer IT workers will become employed?  Bob's answer was diplomatic, but probably true - he said that no, we'll need the same number of workers in the near-term, and that AI Wi-Fi will simply allow the same number of IT workers to make better decisions.  Still, the question makes it clear - the audience is concerned about job loss as AI works its way into the IT industry.

There were two main announcements, a new relationship with Google Cloud Platform and a new flash device - the AFF A800. Also, in our interviews with NetApp, we learned about the future of Fibre Channel at the hyperscalers.

Google.  Google Cloud Platform now integrates NetApp Cloud Volumes as a drop-down menu capability as part of the Google console.  This allows enterprise customers, for instance, to use Cloud Volumes to manage their data on Google's cloud service while simultaneously managing their data on premise.  This relationship with Google now rounds out the NetApp relationships with the main hyperscalers - it already has in place relationships with both Amazon (AWS) and Microsoft (Azure).  NetApp Cloud Volumes on Google Cloud Platform is currently available as a "preview" capability (sign up at www.netapp.com/gcppreview) and is expected to go to commercial status by the end of 2018.  Customers will pay Google for the use of NetApp Cloud Volumes.

AFF A800.  New flash hardware available from NetApp, which besides having impressive density and low-latency capabilities supports NVMe-over-Fibre Channel.  Of course, the product also supports 100 Gbps Ethernet.  From a historical standpoint, it is interesting that NetApp, a company whose heritage was driven by storage over Ethernet, is touting Fibre Channel.  But, that's what its customers are asking for in order to accelerate their on-premise workloads such as database (Oracle), ERP (SAP) and other mission-critical enterprise workloads.  In our interviews with NetApp, we were told that Fibre Channel is growing faster than Ethernet - this makes sense given the company's foray in recent years to flash and low-latency workloads.

Fibre Channel at the hyperscalers?  We asked about what is going on with the hyperscalers' architecture to adapt to AI/Deep Learning workloads.  NetApp executives explained that AI workloads are different from traditional workloads; they are random, low latency workloads connecting to GPUs.  This type of workload, we were told by NetApp, works very well when attached to Fibre Channel.  From NetApp's perspective, if customers want to run AI workloads fastest, they would likely do so on-premise, using Fibre Channel.  Yet, many customers run their workloads on hyperscalers, all of which use Internet Protocol and the underlying Ethernet infrastructure.  We have always been skeptical that hyperscalers would adopt Fibre Channel.  We believe the hyperscalers may work with vendors such as NetApp to develop additional software capabilities to address the changing workloads relating to AI/ML/GPU workloads in the future - on top of IP/Ethernet infrastructures.  

Keynotes at the NFV World & Zero-Touch Congress in San Jose, California were very interesting today.  We share our observations and view of the main themes from these interesting presentations by Nokia, NEC/Netcracker, Google, CenturyTel.  The main theme of these presentations, we think, is this:  NFV/SDN is now deeply in the deployment and commercial phase, where compared to 3-4 years ago, it was just a concept.  

Nokia.  The company announced that its Airframe server platform, which is an OCP based design, comes available with either embedded acceleration or pluggable acceleration.  This comment includes its software acceleration.  The company explained that its Reefshark chipset can be equipped on the Airframe server and can perform better than a non-accelerated server:

• Layer 1 and 2 offloading - 100% better
• Content acceleration - 30x better
• Machine Learning / video recognition - 10x better
• Crypto acceleration

In explaining functions that an Airframe with Reefshark can perform, the company gave a good example: massive MIMO beamforming can be assisted by the machine learning capabilities.  

NEC/Netcracker.  Enrique Gracia presented several uses cases of the NEC/Netcracker customers that related to NFV/SDN.  He explained that 16 customers have deployed one or more of these uses cases.

Full Stack OSS/BSS/MANO.  A customer deployed this system in 12 weeks to launch a VNF.  The system managed both physical and virtual devices.

Expand to a new territory using VNFs from home region.  A customer now delivers services to a customer outside the home territory by deploying the software and service from the network location at the home location.  In this particular case, NEC/Netcracker and its customer do revenue sharing and VNFs include SD-WAN, virtual firewall and others.  The service provider is expected to expand its customer addressable base by 40%, mainly targeting small/medium businesses in this non-home region.  This system uses MANO, OSS, BSS and the marketplace.  The company says in this case, time to revenue is expected to take 50% less time to deploy new VNFs in the future.

uCPE (Universal Customer Premises Equipment) deployment instead of branded hardware.  The company worked with a service provider company to enable uCPE to be deployed as an alternative to Cisco, Juniper and others' gear. 

Google Cloud.  Vijoy Pandey, who represented Google Cloud, presented on the topic of using AI/ML to reconfigure its data center system.  The company's cloud data center architecture has been evolving continuously since it was first introduced.  Currently, the company is using its own AI/ML system to learn from current network traffic patterns in order to design its future network architecture.  

CenturyTel.  The company has deployed Broadcom based Ethernet switches using its own Network OS.  These switches do their own packet forwarding.  Additionally, the company has built its own orchestration system called VICTOR.  It draws upon Ansible, NetCONF, uses the service logic interpreter from ONAP and uses parts of Open Daylight.  The company plans to open source this development and the spokesperson Adam Dunstan said, perhaps jokingly, that this might be called ONAP-lite.

The OCP Summit 2018 hit record attendance and we can can summarize the theme as that of continued disaggregation of network/server functions.  Examples of demonstrations, presentations and proposals associated with disaggregation are as follows:

Broadcom joined both Innovium and Nephos by publicly announcing 12.8 Tbps fabrics with its Tomahawk 3 product line.  We love new data center silicon from all vendors, it is something we track closely and we see these as a disruptive technologies to the networking ecosystem and an enabler of next generation cloud architectures.  There will be many more such announcements in 2018.  Here are some of our takeaways as we enter 2018.
 
More rapid innovation cycle – Even noted in the Broadcom's Tomahawk 3 press release, we see the demand requirements of the hyperscalers as driving a more rapid cycle of silicon over the next couple generations.  Tomahawk 3 is being introduced less than the typical 24 months we see separating prior between generations of data center fabric semiconductors.  This will put significant pressure on parts of the supply chain, especially on optics vendors.  Optics vendors are still ramping for 100 Gbps and now must support both OSFP and DD-QSFP for 400 Gbps, essentially doubling their product diversity needs.  Not only are there more form factors, but there are also different variations of distance and specifications that increase the complexity.
 
What next – We see two waves of 400 Gbps, the first being based on 56 Gbps SERDES, the second coming in the 2020 timeframe based on 112 Gbps SERDES.  We believe 800 Gbps is not that far off in the horizon as hyperscalers like Amazon and Google continue to grow.  We note that the hyperscalers are about to be 3-4 generations ahead of the enterprise.  This type of lead and technology expertise really changes the conversation around Cloud.  We saw this at Amazon re:Invent with their Annapurna NIC, the Cloud is doing things that just aren’t possible in the enterprise, especially around AI, machine learning, and other new applications that take advantage of the hyperscalers size. 
 
2018, the Year of 200 Gbps and 400 Gbps – In 2018 we will see commercial shipments of both 200 Gbps and 400 Gbps switch ports.  We see significant vendor share changes because of this.  Simply put the Cloud, especially the hyperscalers will be that much bigger by the end of 2018 and they buy a different class of equipment then everyone else.  This will continue to cause the vendor landscape to evolve.